Slim, tobacco, ICSS and health: finance, function, influence and interests

The relationships between ICSS, Carlos Slim and the tobacco industry remain rooted in the finances of the Slim/GC commercial enterprise and in the services to the tobacco industry that Slim continues to provide. They have been and remain arguably antithetical to national, regional and global interests in public health.

Origins of ICSS funding

Evidence from internal tobacco industry documents and web pages published at carlosslim.com (http://carlosslim.com) challenges Frenk's assertion that ICSS funds do not derive from the tobacco industry.18 The website notes that GC (originally Grupo Galas) was incorporated in 1980 ‘to obtain the majority stake in Cigatam, in which Philip Morris was a 29% partner’.38 While GC expanded dramatically via successive purchases in the 1980s and 1990s, the investment in Cigatam was ‘the first and most important because of its cash flow, providing the Group with sufficient liquidity to capitalise on available opportunities and thereby increase its acquisitions of big companies’ (emphasis added).39

By 1995 Cigatam was Mexico's most profitable domestic cigarette company, generating 24% of GC's revenue and 32% of its net income.40 In 1997, immediately before Slim was elected to its board of directors,41 the Philip Morris parent company increased its stake in Cigatam to 50%, paying GC US$400 million.42 Shortly after the inauguration of ICSS in 2007, Slim/GC further profited by selling an additional 30% of Cigatam to PM/Altria43 at a price of US$1.1 billion.44 By 2008, Cigatam commanded 55% of the Mexican cigarette market and continued to increase its profits.45 46 The Slim/GC enterprise continues to benefit from its remaining 20% share of Cigatam,44 as well as from holdings in PMI.47

During the early 1980s, Slim/GC also became the largest shareholder in Cigatam's main competitor, Cigarerra La Moderna (CLM), which was partnered with British American Tobacco (BAT), though seemingly less openly than was Cigatam with PM.38 48 In 1985, ostensibly ‘to avoid antitrust problems’,49 Slim sold his 40% stake in CLM (which then held a 75% share of the Mexican market38) to competitor/colleague Alfonso Romo Garza for US$32.4 million.49 50

The local power and profitability, as well as the attractiveness of these two Mexican companies to the international tobacco industry continued to increase. Though formally competitors, Cigatam and CLM were described as functionally cooperative, being said to constitute an effective merchandising duopoly49 51 that controlled 98% of Mexico's cigarette market in 1997.52 In 1990, when the government of Mexico shut down the parastatal Tabacos Mexicanos (Tabamex) leaf-buying agency for reasons of corruption and incompetence (Tabamex had been established in 1972 to protect growers from cigarette manufacturers' buying practices),53 the tobacco duopoly vigorously refilled the vacuum: Cigatam's leaf-buying arm Tabacos Desvenados (Tadesa)54 together with CLM's leaf-buying division Agroindustrias La Moderna55 came to dominate the trade in Jalisco-Nayarit and Veracruz,53 56 57 where 92% of Mexico's tobacco is grown.58 Philip Morris' interest in increasing its control of Cigatam and BAT's in buying CLM have both been attributed in part to this enviable control of both ends of a large and growing national market.51 When the Garza family sold its share of CLM (which it owned through Empresas La Moderna (ELM)) on to BAT in 1997, they received an astounding US$1.7 billion51 52 59: a 500% profit on their 1985 investment; thus, demonstrating the rapidly rising value of the Mexican cigarette market. Meanwhile, in 1996, the year before PM increased its stake in Cigatam to 50%,42 the Mexican company contributed US$3.4 million in license fees to Philip Morris for manufacturing Marlboro and Benson & Hedges, and almost US$50 million in dividend payments.40

Slim's direct involvement in PM/Altria intensified during his service on the company's board of directors from 1997 to 2006, and he benefited additionally from annual retainers and share accumulations.60 Altria's 2005 Annual Report, the last full year in which Slim served, showed him owning over 4 million company shares, almost 1.5 times that of then-Chairman Louis Camilleri.60 In 2000, Slim purchased 3.9 million shares at greatly depressed prices,61 selling them for a profit of US$63 million 1 year later.62 Slim retained 1.5 million Altria shares when he retired from its board in the spring of 2006.63

Thus, while ICSS's endowment might have come immediately from shares of the telecommunications and development companies América Móvil and Ideal,18 it was profits from Cigatam/CLM/Tadesa and Slim's multiple relations with PM/Altria that financed GC's expansion into those industries. Tobacco money enabled GC to purchase a share of the privatised Telefonos de Mexico (Telmex) from the Mexican government in 1990, which became the basis of GC telecommunications holdings,39 64 from which América Móvil was spun off in 2000.38 Ideal was similarly spun off from Grupo Financiero Inbursa in 2005,65 which had functioned for CG to ‘to invest and manage excise tax ‘float’ funds’,40 that is, taxes Cigatam collected continuously from cigarette sales, but only paid over to the Mexican government periodically. PM documents and carlosslim.com web pages demonstrate that ICSS's funds originated in the tobacco industry as illustrated in figure 2.

• Download figure
• Open in new tab
• Download powerpoint

Figure 2

Financial flows between Carlos Slim enterprises and transnational tobacco companies.

Carlos Slim's strategic value to PM

Documents indicate that PM viewed Slim's presence on its board as useful to its relationships in Mexico and with the Mexican–American community. When Venezuelan tobacco executive José Antonio Cordido-Freytes retired in 1994,66 PM sought to fill his board position from among a list of ‘candidates of Hispanic origin and … members of the outgoing cabinet of President Carlos Salinas of Mexico’.67 In 1997, after increasing its share in Cigatam,42 the Philip Morris parent company announced the election of Carlos Slim,41 hailed by then Chairman and CEO Geoffrey Bible as ‘an absolutely brilliant businessman who brings to our company extensive expertise in the international marketplace’.41 A total of 46 US Hispanic elected officials, publishers, corporate heads and community activists were identified as receiving a letter from Bible calling attention to Slim's appointment.68 69 Bible described Slim as bringing ‘valuable insights to our company concerning the international marketplace, US–Mexican relations, and our relations with the Hispanic community’.70

Even before his elevation to its board, however, Slim had been serving as a PM conduit to the Mexican government. Without a ‘real corporate affairs function’ in Mexico, PM had ‘traditionally relied on the chairman … of our corporate partner [that is, Slim] … to represent us in these matters’.71 If anything, this reliance intensified: in 1999, PM's Vice Chairman for External Affairs and General Counsel Murray Bring thanked Slim for having him and his wife as personal guests and for arranging meetings with key Mexican ministers. Bring appreciated Slim's arrangement of a ‘very productive and constructive’ meeting with President Ernesto Zedillo and ‘the opportunity to meet the Treasury and the Health Ministers at your home … [and] to engage the Health Minister in a stimulating discussion. I can't tell you what a breath of fresh air it is to discuss important health issues with a government official who is both intelligent and open-minded’.72

Slim's value to PM was further demonstrated when the company made a substantial donation to a Slim family charity consistent with its wider ‘influence’ strategies.73 Shortly after the death of Slim's wife Soumaya in 1999, a Philip Morris Mexico executive recommended making a contribution in her honour to the Telmex Foundation in support of programmes she had championed.74 Bring seconded this proposal, observing it was ‘consistent with [PM's] own corporate contributions' focus on food and hunger’, and recommended a gift of US$100 000 to recognise ‘an active Director … who is making, and continues to make, a significant contribution to the Company’.75 Acknowledging Bible's ‘concern that our contribution not appear to Carlos to be paltry’,75 Bring noted this would allow them to ‘advise Carlos that this is equal to the largest contribution we have ever made in these circumstances’.75

In March 2008, less than a year after the launch of the ICSS, Slim became a director for the newly independent PMI, when it was spun off from the PM/Altria parent company.76 His general directorial duties are to ‘foster the long-term success of the Company … [by] establishing broad corporate policies, setting strategic direction, and overseeing management, which is responsible for the day-to-day operations of the Company’.19 Specifically, he serves on PMI's Regulatory Affairs and Product Innovations Committee, which could be understood as a continuation of his de facto regulatory affairs services for PM/Altria, and on the Finance Committee that makes such strategic decisions as setting the limits for corporate debt and borrowing, and setting dividend payments.43 Moreover, under New York Stock Exchange rules, among all PMI's directors, only Slim and CEO Louis Camilleri could not be considered ‘independent’: Slim's ownership of and executive position with Cigatam made him effectively a member of PMI management under US regulatory rules.19

Who controls ICSS?

If Slim had no further role than the financing of a health charity, it would still present a problematic case of ‘white coating’—the tobacco industry clothing itself in the respectability and goodwill of medical research and healthcare provision.77 78 While Slim appears to have no official role in ICSS per se, he remains the Chairman Emeritus of GC,19 within which ICSS and its parent the Carlos Slim Foundation, are described as ‘a fundamental part of Carlos Slim Helú's business strategy and culture’.79 As Slim has stepped back from the day-to-day management of GC's commercial activities, he has focused more on managing its charitable foundations.39 It was over his signature that the Grupo Carso Plan 2009 reassured ‘employees, clients, investors, suppliers and the general public’ (our translation) that, despite difficult economic times, GC remained profitable and committed to its charitable projects, among which were detailed ICSS programmes for reducing maternal and infant mortality and increasing breast cancer awareness.80

As the public face of ICSS, Slim involves himself directly in ongoing activities at high levels. In June 2008 the First Lady of Panama met with Slim ‘to sign an agreement that will allow Carso Health Institute and the government of Panama [to] implement joint actions in matter of [maternal and child] health’.81 A subsequent announcement by the First Ladies of Honduras and Panama that ICSS was partnering with their Coalition to combat stigmatisation and discrimination against people with HIV/AIDS stated that ‘Slim will support the [Coalition of] First Ladies of Latin America in its campaign against AIDS’ (our translation).82

As recently as February 2010, Slim presided over the inauguration of a new Slim Initiative in Genomic Medicine, a collaboration with the joint MIT/Harvard-based Broad Institute and Mexico's National Institute of Genomic Medicine, demonstrating his ‘visionary commitment to public health in Latin America … and his interest in the improvement of health in the region’ (our translation).83 While it is not possible to specify Slim's contribution to the establishment of such high-level alliances, his visible participation nonetheless remains important to the public functioning of the health charity.

Similarly, although Slim does not sit on the ICSS board of nine directors,84 only one, physician Dr Octavio Ruiz, appears not to have crosscutting relationships with Slim/GC/ICSS. Of the remaining eight, three are family members (son Marco Antonio, also CEO of Inbursa and a GC director;37 son-in-law Arturo Elias, a GC director and a key Telmex executive,37 described as Slim's spokesman85; and daughter Vanessa), a fourth is a GC executive (Raul Zepeda, a Telmex attorney and Inbursa director86), two are directors of GC and/or its subsidiaries (Jose Kuri and Roberto Kriete86), the seventh, Dr Guillermo Palacios y Santos, received the 2009 ‘Carlos Slim Prize for a Research Career’ (our translation) worth US$100 000,87 and the eighth, Dr Roberto Tapia-Conyer, is employed by ICSS as its director general.88 Moreover, as a senior figure in the Mexican Health Ministry, Tapia-Conyer publicly defended the Ministry's 2004 concessions to Cigatam, PM and BAT made in exchange for their payments to the national social security programme.89 As part of the agreement made by then Health Minister Julio Frenk, Mexico waived its authority to regulate details of advertising and cigarette package design, including agreeing no graphic warnings, and effectively undertook that future tax increase or tobacco control regulation would not financially harm the companies.90 This agreement was reached on WHO World No Tobacco Day (31 May),91 and arguably breached Mexico's commitments under the FCTC,90 which Mexico had become the first country in the Americas to ratify only 3 days earlier.92 Criticised vociferously by public health advocates in Mexico and abroad, the agreement was not renewed by the new government in 2006.93

Finally, it cannot be overemphasised that Slim, who is said to remain in close communication with his three sons and two sons-in-law,94 the active managers of his business interests,37 is not simply any wealthy patron. His family holdings were reported to comprise more than 5% of Mexico's 2006 gross domestic product and to account for one-third the value on Mexico's US$422 billion stock exchange.14 Consistently ranked alongside Bill Gates and Warren Buffett as one of the three richest men in the world,14–17 Slim's significance within a national economy 1/14th the size of the US95 substantially exceeds that of Buffett and Gates.

ICSS and the health consequences of tobacco

Global mortality attributable to tobacco is staggering in its scale and increasingly inequitable in its distribution. Total deaths are expected to rise from 5.4 million in 2005 to 8.3 million in 2030, by which point they are projected to decline in high income countries by 9% while doubling from 3.4 million to 6.8 million across low-income and middle-income countries.96 It is clear that globalisation is contributing to this shift, with the World Bank having concluded that trade liberalisation ‘has a large and significant impact on smoking in low-income countries, and a smaller, but still important effect on smoking in middle-income countries, while having no effect on higher income countries’.97

Following 2008 population estimates, Mexico ranked 15th in the world in terms of number of male smokers (11.3 million)98 and 19th in terms of female smokers (3.8 million):98 15% to 20% of male deaths and 5% to 10% of female deaths in 2000 were thought attributable to smoking.98 As ICSS was launched to ‘prioritise work on … emerging diseases, such as heart disease, cancer, and other chronic and degenerative diseases, as well as … challenges due to the globalisation of health risks’,13 all characteristic consequences of tobacco smoking, it is reasonable to ask what ICSS says and does about the subject.

Neither tabaco (tobacco) nor cigarrillo (cigarette) are indexed on the ICSS website. Fumar (smoking) and dejar de fumar (smoking cessation) are each indexed once and lead to the same web page described below. Tabaquismo (tobacco addiction) is indexed twice: the first reference is that which also indexes dejar de fumar.

The principle reference to smoking is presented under a programme titled Vive Sano (‘Live Healthy’), described as ‘an innovative strategy intended to promote behavioural changes through the adoption of healthier lifestyles’. Tabaquismo is sandwiched between ‘sedentarism’ and ‘excessive consumption of fats and carbohydrates’, referred to as ‘risks of suffering non-communicable diseases’, and the focus of the programme given as an ‘emphasis on diabetes, hypertension and obesity’ (our translations).99

Vive Sano comprises five ‘objectives’: (1) ‘raising public awareness … [through] healthful messages’; (2) ‘motivating people to adopt and maintain healthy lifestyles … through strategies … which endorse healthy eating, physical activity and smoking cessation’; (3) ‘offering quality outpatient medical attention’; (4) ‘using new communication technologies to support health education and promotion’; (5) ‘educating, assisting and supporting self-care and monitoring by people with risk factors … and their families’ (our translations).100 Already Vive Sano seems weak, but its inadequacy from a tobacco control perspective emerges starkly when it is compared to the best practice recommendations of, for example, the US Center for Disease Control and Prevention; to wit: ‘preventing initiation among youth and young adults; promoting quitting among adults and youth; eliminating exposure to secondhand smoke; identifying and eliminating tobacco-related disparities among population groups’.101 Vive Sano makes no mention of youths, initiation prevention, elimination of secondhand smoke, or issues of population disparities, and its acknowledgement of cessation is vague at best. Compounding silence with misdirection, Vive Sano's ‘objectives’ are illustrated with a frankly erotic photograph of a young woman in lycra shorts measuring the circumference of her well-toned thigh.100

The one additional index of tabaquismo on ICSS's web site—a 2008 press release announcing ICSS's cosponsorship of a Healthful Longevity programme in Pacheco, state of Hidalgo—mentions youth and health resource-deprived populations but only in the context of ‘treating chronic illnesses in the population of limited resources and identifying risk factors among youth’. Located in a diabetes centre, Healthful Longevity ‘is focused on evaluation of the state of health of healthy people and people with risk factors for four diseases: diabetes, obesity, hypertension and elevated cholesterol and triglycerides’. Again, tabaquismo is simply sandwiched between ‘overweight’ and ‘sedentarism’ as a ‘risk factor’ (our translations)102 with no elaboration of causes, consequences or remedies. The 2 web indexings for tabaquismo contrast with a total of 20 combined returns for obesidad (obesity) and sobrepeso (overweight).